Having secured an agreement on reimbursements for out-of-network care with the last health insurer covering New Yorkers, the state’s governor and attorney general announced a new insurance regulation for patients.

New York Attorney General Andrew Cuomo announced he had secured an agreement with California-based Health Net, which covers nearly 200,000 members in New York, to end its relationship with Ingenix, a database used to set reimbursement rates. The latest agreement concludes a six-month effort by Cuomo’s office into the UnitedHealth Group owned company and its database.

An investigation by the attorney general’s office found that the database manipulated rates and relied on outdated information to determine reimbursement rates.

The agreement with Health Net brings means Cuomo has secured agreements with 12 health insurers, including CIGNA, Aetna and WellPoint, to stop using the Ingenix system. He also collected nearly $100 million for the creation of a new database run by a non-profit organization yet to be named.

David Paterson

With that accomplishment, Cuomo and New York Gov. David Paterson announced new insurance regulations that they say will ensure fairness and accuracy in the consumer reimbursement system. The proposed reform will allow patients to know beforehand the actual amount health insurers will pay for out-of-network treatment so they can make informed decisions about where to seek care, according to a statement.

The state’s insurance department will seek public comment prior to the regulation’s adoption.

“For too long, health insurers have not fairly represented the coverage amounts they will pay for out-of-network medical services,” Paterson said in a statement. “These reforms will make sure consumers can make informed decisions about health care knowing beforehand what it will cost them. ”

Paterson said Cuomo has “effectively required health insurers to live up to the promises they make,” but regulation is also needed to ensure companies continue their pledges after their five-year agreements are up with the attorney general’s office.

“The new regulation issued by Governor Paterson will codify these reforms that the entire health insurance industry has now embraced,” Cuomo added. “It will eliminate the conflicts of interest that infected the industry in the past, and replace them with fairness, accuracy and transparency.”

The new regulation governs health and accident insurers, and health maintenance organizations that promise to reimburse customers who go out of network based on the “usual and customary” rate of the service provided.

Among the requirements in the regulation are that insurers and HMOs must use an independent source for establishing usual and customary rates. The pair said this stipulation would end conflicts of interest – alleged in UnitedHealth Group’s ownership of Ingenix – and bring more transparency to consumers.

Outgoing New York Insurance Superintendent Eric Dinallo said that consumers have the right to know what it will cost them to go out of network and the new regulation “will ensure that insurance companies use accurate data about out-of-network costs and that consumers know how much their health insurance will pay if they prefer out-of-network care.”

The new regulation requires insurers to make certain that a usual and customary rate schedule fairly and accurately reflects market rates, including geographic differences in cost and utilizes a diverse group of relevant companies, according to a draft provided by the governor’s office.

Insurers must also disclose the specific amount of reimbursement for a particular procedure or treatment within three business days of a request by one of their members and post a copy of the usual, customary and reasonable schedule of reimbursement on a website accessible to members.